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The Distributional Effects of Oil Supply New Shocks

Author

Listed:
  • Theo Drossidis

    (Brunel University)

  • Haroon Mumtaz

    (Queen Mary University of London, School of Economics & Finance)

  • Angeliki Theophilopoulou

    (Brunel University)

Abstract

This paper uses high frequency data on the distribution of US income to investigatethe heterogeneous effects of oil supply news shocks. Using a FAVAR with an external instrument, We show that these shocks have large negative effects on the left and right tail of the distribution. For low income individuals, the effect is driven by a decline in wages and proprietor’s income, while a fall in corporate profits and interest income drives the effect for affluent individuals.

Suggested Citation

  • Theo Drossidis & Haroon Mumtaz & Angeliki Theophilopoulou, 2024. "The Distributional Effects of Oil Supply New Shocks," Working Papers 975, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:975
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    File URL: https://www.qmul.ac.uk
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    More about this item

    Keywords

    Oil shock; income inequality; FAVAR; External instrument identification.;
    All these keywords.

    JEL classification:

    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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